2024 Real Estate Price Outlook : What to Anticipate for Residential Real Estate in that Year

Sales of housing reached a record high in Q3 2023, with almost 120,300 units sold in the top 7 cities.

In 2023, the Indian residential market showed no signs of slowing down. The first nine months of 2023 saw an all-time peak in home sales. Despite the rise in interest rates and property costs, ANAROCK Research reports that total house sales in the first nine months were over 349,000 units across the top 7 cities, or 96% of total sales recorded in 2022.

The trend has persisted in the current quarter, according to Anuj Puri, Chairman of ANAROCK Group, with several developers reporting a notable increase in both new launches and home sales. Sales of housing reached a record high in Q32023, with almost 120,300 units sold in the top 7 cities.

This suggests that end users are driving maximum sales and that the desire for homeownership has not diminished. Leading and publicly traded developers have, in the meantime, expanded their supply and reported strong sales of homes. Given the significant growth in enthusiasm for homeownership in 2023, this trend is expected to continue in the next quarters as well. Puri stated, "Residential demand is still very strong."

The market observer went on to say that despite the high demand, several developers had a robust pipeline of new project launches throughout the year, especially during the current holiday season in all seven of the top cities. According to ANAROCK Research, throughout the first nine months of this year, over 328,000 units have been launched in the top seven cities. By comparison, during the same period in 2022, over 265,000 units were launched in the top seven cities, representing a 24 percent annual increase.

In terms of commercial demand, the first half of 2024 has seen comparatively little activity in the top 7 cities for commercial office space, with both net absorption and new completions essentially staying unchanged from the same time last year. The bright side is that office activity in the first half of FY 2024 was essentially unchanged from the same period in FY 2023, despite all domestic obstacles and worldwide difficulties, including early layoffs. It was widely expected that India's commercial demand would decline due to corporate layoffs and firm closures, according to Puri.

According to data, the Indian office market had a meagre 5% increase in new office supply across the top 7 cities in the first half of the fiscal year 2024, or about 25.12 million square feet. In the first half of FY24 (H1FY2024), the southern cities?Bengaluru, Hyderabad, and Chennai?remain the most dominant among the cities, accounting for 72% of the total new office supply among the top 7 cities.

Regarding net office absorption, the demand for office space in the top 7 cities decreased by 1% year over year in H1 FY2024, or about 18.84 million square feet. With 24 percent of the net office absorption among the top 7 cities, Bengaluru continued to be the most popular city.

The path ahead

Puri continued, "Given the current circumstances, we could see an overall 8?10% increase in average residential prices in 2023 compared to the prior year." 

The truth is that residential demand in all cities remained at an all-time high, even in the face of rising interest rates and global challenges. "There was an 8?18% increase in average home costs in Q3 2023 compared to Q3 2022 across the top 7 cities, primarily as a result of rising building raw material prices and overall demand,? he continued. According to ANAROCK Research, the average price of real estate in the top 7 cities rose from Rs 6,105 per square foot in 2016 to 11% more in the same year.